Angela Merkel says bank reforms must not wane

German Chancellor Angela Merkel warned yesterday that governments would fight off any attempt by banks to water down tough reforms of financial regulations.

"There is perhaps a certain danger that banks which are doing quite well again might try to not exactly support the regulation efforts, but to put them in doubt again," Mrs Merkel told the Wall Street Journal Europe in an interview.

"I don't see that they have a chance of succeeding, either with the American Administration nor in the European Union," she added.

British authorities which have defended London's position as a global financial sector were on board with the EU approach, Mrs Merkel said.

"We have agreed to a sensible oversight of financial markets in Europe. Because of this crisis with its high costs we have built up the political pressure so that everybody is pulling in the same direction," she said.

The German leader, described as the world's most powerful woman, said she would push for a focus on sustainable economic development at an upcoming meeting of the G8 industrialised nations in L'Aquila, Italy.

"We must all grow sustainably, unlike in the past," Mrs Merkel said. That meant establishing strategies to balance finances as quickly as possible once economic growth returned, which the European Central Bank says could occur in mid-2010.

"We must find a timely exit from the crisis back into a normal scenario. We must define the point at which the exit scenarios must start, and we must pursue a normal budget management again," she asked.

"The crisis will only be surmounted when we have reached the level of gross domestic product of before the crisis. Then it will be important for us to take care that we don't set up the next crisis right away by taking too-high risks."